Advantages and Disadvantages Of Indigenization | Meaning

Hello, welcome to this hall as we study about the advantages and disadvantages of indigenization:

Table Of Contents

1. Meaning of indigenization
2. Advantages of indigenization
3. Disadvantages of indigestion.
4. Revision Questions

Meaning of Indigenization

Meaning: Indigenization is the transfer of ownership and control of business Enterprises from foreigners to the indigenes. It is a policy designed to ensure greater participation of indigenes in the ownership, control and management of business enterprises. The major aim is to reduce foreign domination of the economy and to ensure indigenous participation. Indigenization tries to simulate indigenous entrepreneurship.

Advantages And Disadvantages of Indigenization

Here we take a look at the advantages of indigenization:

1. Ensures indigenous participation: Indigenization ensures greater participation of indigenes in the control and running of business enterprises of their country.
2. Development of local technology: It leads to the development of local skills and technology.
3. Acceleration of industrial Development: It leads to the promotion and acceleration of industrial development.
4. Reduce foreign control of the economy: Reduce foreign control and domination of the Nations economy.
5. Leads to local retention of profits: It leads to local retention of profit which otherwise would have been taken to other countries as capital flights.
6. Ensures self-reliance: Indigenization eliminates the problem of dependence on foreign goods by ensuring self-reliance.
7. Provision of employment opportunities: It create employment opportunities for the indigenous.
8. Development of private initiatives: When indigenes are encouraged to participate in business enterprises, private initiatives will develop with indigenization.
9. Industrial Development: Development of industries is another advantages of indigenization. Indigenization will bring about rapid industrialization of the economy.
10. Improves standard of living: The standard of living of the people will increase through participation in business enterprises.

DISADVANTAGES OF INDIGENIZATION

Below are the disadvantages of indigenization in commerce:

1. Discouragement of foreign Investments: Indigenization can discourage foreign investment in a country.
2. It leads to disharmony between countries: Indigenization can lead to disharmony among countries of the world as friendship will be discouraged.
3. It leads to Capital flight: Indigenization can lead to Capital flight as foreign investors will be forced to relocate to other countries.
4. Inexperience and and incompetence can destroy the business: As a result of indigenization, business can be transferred to people who are not experienced and competent enough to handle such business. This will adversely affect the success of the business.
5. Rich people can hijack the economy: Few rich people can use their financial wealth to buy and take over all businesses.

Difference Between Indigenization And Nationalization

• Indigenization: It transfers ownership of foreign business to citizens.
• Nationalism: It transfers ownership to the government.
• Indigenization: It encourages indigenous participation.
• Nationalism: It ensures state Monopoly of industrial activities.

Revision Questions

1. What is indigenization?
2. Outline five advantages of indigenization.
3. Briefly Explain four differences between indigenization and nationalisation.
4. State five disadvantages of indigenization.

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